Thursday, October 29, 2009
A.) Prices gapped higher at the open on strong volume. Prices then found support at the 10 minute EMA and moved higher.
B.) Prices hit resistant at the 200 minute EMA and traded there for about an hour. They eventually moved through resistance.
C.) Prices continued to find support at the 10, 20 and 50 minute EMAs for the remainder of the day.
While today's rally is good news because it takes us away from the precipice, the chart shows we are not out of the woods by any stretch. Prices are still below the 10 and 20 day EMAs and the 10 and 20 day EMAs are clearly moving lower. In addition, today's volume isn't as impressive as the volume we saw on the sell-off over the last few days. In addition, consider these two other charts:
The Russell 2000 is still in serious trouble. It's printed a double top and prices are simply hanging on just above support. The 10 and 20 day EMAs are moving lower and the 10 day EMA has crossed below the 20 day EMA. In addition, prices printed long bars on the way lower on high volume.
Everything regarding the IWMs above applies to the Transports with the added caveat that the 10 day EMA is about to move through the 50 day EMA.